- August 20 2024
Nigeria’s SEC says crypto licences not issued yet, to begin in August
Nigeria’s Securities and Exchange Commission (SEC) has said it is yet to issue crypto licences, dismissing reports from several publications that it approved a provisional licence to a major crypto platform. The regulator will issue its first licences for digital service and tokenized assets in August, Bloomberg reported on Tuesday. “Approval is yet to be given to anyone,” SEC Director General Emomotimi Agama told TechCabal via text. The move suggests a major policy turnaround from the SEC which has talked up banning P2P trading which Nigerian authorities blame for the volatility in the FX market. In May 2024, the SEC DG met with crypto industry players and reiterated the need for crypto exchanges to delist naira from P2P trading. In January 2024, TechCabal reported that at least two crypto exchanges—Quidax and Luno—were in talks with the SEC over a crypto licence after the Central Bank lifted a two-year ban on crypto-related banking transactions. Both companies declined to comment at the time. Since February 2024, crypto exchanges have faced increased scrutiny from Nigerian regulators. The government accused crypto traders of using P2P trading to manipulate the naira. Nigeria’s National Security Adviser (NSA) also classified crypto trading as a national security issue. Binance, the world’s largest crypto exchange, has been at the center of a regulatory clampdown in Nigeria with the company facing money laundering challenges and one of its executives detained. Central Bank Governor Olayemi Cardoso claimed $26 billion in untraceable transactions were processed by Binance. Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!
Read More- August 20 2024
Uber Kenya increases fares by 10% but drivers are unimpressed
Ride-hailing app Uber has increased its base fare in Kenya by 10% to pacify drivers who went on strike and imposed their prices. Uber increased the minimum fare to $1.71 (KES220) and introduced a priority service that will charge an additional $0.85 (KES110) for a shorter wait time. “Uber has made these pricing updates to ensure that drivers continue to have the opportunity to maximise their earnings while driving on the Uber app and at the same time, remaining at an affordable price point for riders,” Imran Manji, Uber head of East Africa, said in a statement. On July 16, the drivers went on strike to force the apps to increase the minimum prices to $2.33 (KES300). They also wanted the companies to review their guidelines on suspending and deactivating accounts in disciplinary cases. When that did not happen, the drivers resorted to charging their rates and taking rides offline. The sector union representatives who spoke to TechCabal said the raise was “insignificant.” They said the new prices still cannot cover high operational costs. “We don’t really feel it. We made our demands clear that we want at least KES300 as the base fare among other demands,” Zakaria Mwangi, the Secretary General of Ridehail Transport Association (RTA) told TechCabal. “They’ve not gotten to 10% of our demands. We will be back at it again.” Uber said it will increase investment in customer promotions to keep its rides affordable. Gig drivers have maintained that the rates charged by app companies do not reflect the rising cost of operations. The company said have introduced cash bonuses for partner drivers and are currently entering partnerships with vehicle maintenance companies to help operators cut costs. Other companies including Bolt, Faras and Yego are yet to adjust their prices, following a meeting between the apps and the drivers on August 13.
Read More- August 20 2024
Zone, NIBSS partner to use blockchain to record POS payments
Zone, a Nigerian blockchain-enabled payments infrastructure, has partnered with the Nigerian Inter-Bank Settlement Scheme (NIBSS) to introduce blockchain technology to Point-of-sale (POS) terminal payments. The partnership will allow participating financial institutions to view the blockchain ledger that contains all recorded transactions. Banks and fintechs will use this data to reconcile transactions, settle disputes quickly, cut customer wait times, and reduce chargeback and other POS-related fraud. There are two intermediaries in POS transactions: the payment switches and the Payment Terminal Service Aggregator (PTSA). When a POS transaction is initiated, the PTSA manages the interaction between the cardholder and the terminal, while the payment switch receives this transaction data from the PTSA and routes it to the cardholder’s bank. This siloed communication pattern makes reconciliations difficult when there are downtimes. Zone, a payment switch itself, is shortening the communication path for processing POS transactions with this decentralised blockchain ledger. “We’ve built the PTSA functionality into the blockchain network so that every node [on the blockchain] can perform these checks,” Zone CEO Obi Emetarom told TechCabal in an interview. “The PTSA [NIBSS] will use that function to screen payment terminal transactions which they perform today on a central system.” NIBSS will perform its PTSA functions in the blockchain system. The data from both systems will be harmonised into a central repository that better serves the PTSA. Zone first implemented its blockchain technology in automated teller machines (ATMs) before creating a module within its layer-1 blockchain system to accommodate POS payments. Unlike ATM transactions that did not need a PTSA, Zone says the partnership with NIBSS was crucial as its switching licence was not enough to grant it access to POS payments. Emetarom acknowledges that for the blockchain-based PTSA to work, it has to achieve a wider scale. Banks and fintechs with interests in the agency banking sector have to come onboard—many, if not all of them. Currently, over 30 financial institutions are integrated with the Zone network. Zone currently offers this integration service at no upfront cost. If there’s no chance for these banks and fintechs to lose money, then it incentivises them to sign up; and if they’re impressed by this technology, they’ll sign on for a longer term. Despite what looks like a win for Nigeria’s payments system, Zone has to keep an eye out for the transaction volume on its system. One of the arguments around NIBSS is the need to scale its infrastructure to accommodate the growing volume of daily digital payments. “The only issue with it is transaction throughput. Some [blockchain] layers take about 5 minutes to reach finality, and the receiving party cannot access the money until then, causing a lag in moving money around,” said one blockchain developer who asked not to be named. While Zone didn’t specify the transaction volume it has processed, the company claims the success rate is over 99%. “In 5 years, POS-related fraud activities—particularly the ones related to cashback—will be zero or very close to zero because we expect to have achieved the scale to have the level of impact required to reduce the cases by more than 99%.”
Read More- August 20 2024
Identity crisis: How KYC rules are stunting Nigeria’s financial inclusion
This article was contributed to TechCabal by Kingsley Ndimele and Kehinde Durodola-Tunde. The 2022 McKinsey Report revealed that the financial service market in Nigeria has a potential yearly growth of 10% and projected revenue of $230 billion by 2025. The Fintech sector in Nigeria contributes 33% of this market. However, the EFinA 2023 A2F Survey states that 28.9 million adults are financially excluded in Nigeria. This exclusion is significantly due to the limitations of KYC regulations from the financial institutions in Nigeria. Know Your Customer (KYC) guidelines are vital, multi-layered components of financial procedures in Nigeria. They are accompanied by sustained supervision of customers’ transactions and activities. These due diligence and identity checks operations are targeted to counter terrorist financing, money laundering, and other financial crimes in the country. According to the World Bank Group’s 2018 ID4D Global Dataset, almost 1 billion people lack official distinct identities globally. This is common among people living in developing countries. Nearly 500 million people living in Sub-Saharan Africa lack legal identities. That is 46% of the entire African population. Of all developing economies across the world, sub-Saharan Africa ranks the lowest. Amidst the Covid-19 crisis, FATF introduced regulations for digital identity for financial institutions to onboard users and offer financial services digitally. Gallup World Poll 2018 data revealed that mobile phone ownership among adults in emerging economies had increased to 83%. The 2022 McKinsey Report showed that one out of every 10 transactions in Africa are now digital. Consequently, fintech startups have become critical players in the African financial services sector. Digital financial services have brought about online KYC verification using integrated API systems to validate identity documents and authentic pictures uploaded or scanned by the user. Disrupt Africa’s Finnovating for Africa 2023 report estimated that there are 217 fintech companies in Nigeria. This figure speaks to the significance of identity verification in Nigeria’s financial service sector. Initiating KYC processes is essential but not without difficulties. It is challenging to match seamless onboarding with KYC regulatory compliance. ABBYY Survey 2022 Report revealed that 90% of organisations witnessed their customers switch to a rival fintech because of inefficient onboarding experience. McKinsey reported in a 2022 Survey that 40% of user onboarding time is allocated to KYC procedures. The KYC regulatory framework is dynamic. Numerous KYC guidelines from different authorities must be adhered to, and they change often. Therefore, adapting to technology and dynamic guidelines is challenging. Incorporating KYC procedures with the current onboarding framework is usually challenging because various systems have different abilities, and data swap needs extra development inputs to function seamlessly without considerable alterations. After verifying over 100 million identities in Africa in the past five years, Smile ID reports that 80% of fraud attacks in Africa are targeted at national ID documents. There is an absence of cross-border harmonisation. EY reported that the global cross-border payment industry was projected to be approximately $156 trillion in 2022. The need for clear regulations on regional transactions for tier 3 and tier 2 accounts hinders the positive effect of the system on Nigeria’s huge remitter society. According to the LESG KYC Compliance survey, the average yearly spend on global KYC is US$48 million. Celent predicts that financial institutions worldwide will incur approximately $37.1 billion in 2021 on AML-KYC compliance operations and technology, aside from the cost due to increased customer churn and time investment. In June 2024, KYC regulations by the CBN requested compulsory physical address verification for fintech companies. This applies to every user and POS agent. For a country with a rural population of over 101 million (according to the World Bank collection of development indicators), proof of address is still explicitly demanded as a KYC requirement for tier 1 accounts in Nigeria. Financial institutions still require specific utility bills (issued by electricity distribution companies) as proof of address for identity verification. This makes it difficult for fintech companies to onboard the unbanked in rural areas who use clan-based address systems instead of house numbers. Most of these rural dwellers are not served by electricity distribution companies. The Nigerian Electricity Regulatory Commission 2019 Q2 Report showed that 43% of those who have electricity do not have meters for proper bills. According to WASH 2021 Survey Findings, 33% of the Nigerian population does not have water delivered to them. More so, it is not easy to verify addresses in gated estates. KYC compliance issues, such as a lack of scalable KYC solutions, make cost-effective compliance and holistic maintenance difficult for fintech companies. Traditional KYC procedures, paper-based documentation and manual data entry result in a higher probability of mistakes, inefficiencies and delays. Inaccurate and incomplete data, data privacy issues, and time-demanding and time-consuming KYC procedures significantly affect customer acquisition, experience and retention. The EFInA Access to Financial Services in Nigeria 2023 Report showed that approximately 6% of Nigerians are excluded from accessing financial services due to a lack of KYC identity documents. The financial exclusion rate in Nigeria is about 26%, while the rural exclusion rate is approximately 37% (A2F 2023 Survey Report). Some causes of financial exclusion include the NIN Barrier, BVN limitation and lack of access to KYC identity documents. Furthermore, tiered KYC excludes customers without high-value accounts from performing complete financial transactions. Only basic financial transactions are permitted on tier 1 accounts. Drawing lessons from countries like Brazil, South Africa, Bangladesh, Indonesia, Malaysia, Peru, Egypt, Tanzania, Uganda, Eswatini, and Gabon that have achieved impactful regulations, innovative solutions and effective KYC implementation for their financial institutions, Nigeria needs to introduce new policy innovations and review its existing regulatory Frameworks. To facilitate this, a bill that mandates the identity documentation and digital birth registration of every child between 0-5 years should be passed into law. Proof of Address and utility receipts for KYC verification may be made alternative or absolved for Tier 1 accounts that use clan-based address systems or are unserved by utility firms. A collaborative effort by regulators, fintech innovators, policymakers, and agents is needed to enable fintechs to launch
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- August 20 2024
Flutterwave will accept American Express card payments as AMEX continues Africa push
African payments giant Flutterwave will allow Nigerian merchants to receive payments from American Express card customers as the credit card provider continues its push into Africa. In 2023, American Express cards were launched in Nigeria through a partnership with Access Bank, and by May 2024, AMEX had launched four new credit cards in Nigeria. The company has also partnered with payment processors and banks on the continent, where cash is still the preferred payment method, according to one Bloomberg report. With the new partnership, Flutterwave merchants will unlock a new customer base of American Express card users in Africa and around the world. It will also give shoppers more payment options when dealing with Flutterwave merchants. “This is one of our initiatives to ensure that more people across the world can pay using Flutterwave in Africa. We understand the value of providing shoppers with payment methods that work for them, as well as helping businesses to expand their customer bases, Olugbenga Agboola, Flutterwave CEO said. Flutterwave will later extend the service to merchants in its other African markets—including Tanzania, Rwanda, Ghana and Uganda. “The collaboration is a win-win because it also increases the number of places where our Card Members can use their Cards in Nigeria,” said Briana Wilsey, Vice President and General Manager of Global Network Services EMEA at American Express. Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!
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- August 20 2024
IHS Towers lays off 100 employees as devaluation in Nigeria erodes profits
IHS Towers ($IHS), the world’s fourth-largest independent tower company, has laid off over 100 employees as currency devaluation in Nigeria, its biggest market, squeezes its profits. One person with direct knowledge of the business told TechCabal that the layoffs, which cut across several departments, mostly affected senior employees and the network surveillance team. Most of the affected senior employees have spent a decade at IHS Towers and received “significant” severance packages, the same person said. “[The company said] it was not because of underperformance but because of the economy,” they added. IHS Towers did not immediately respond to requests for comments. Since 2022, IHS Towers has faced pressure from investors over its poor financial performance. The company lost $409 million in the fourth quarter of 2023 after a currency devaluation in Nigeria shrunk revenues and caused FX losses from USD loans. The company, which currently employs 1,600 people, reported a $1.9 billion loss in 2023, a 304% increase from the previous year’s losses. Its market capitalisation is $1.3 billion, a $6 billion decline since 2021. While its share price has slightly rebounded in August to $3.56 after trading at $2.98 in July, it is still a far cry from the highs of 2021, when it sold for $21. IHS Towers operates over 40,000 towers in Africa, roughly 25% of the continent’s entire tower infrastructure, which it leases to telcos like MTN and Airtel. This service is crucial for Africa’s digital economy plans, as towers provide the backbone for internet connectivity. However, rising fuel prices, maintenance costs, inflation, and FX volatility in Nigeria—which accounts for over half of IHS’s sales and revenue—have threatened the business. In the first quarter of 2024, the business spent $88.8 million on power, its largest operating cost. “The company used more than $1.5 billion in cash last year for investing activities, but the line items on the company’s published statement of cash flows for such investing activities are not explained in any meaningful way,” a shareholder said in a June 2023 letter. Gimba Mohammed, the director of government and external relations at IHS Towers, said at a conference in August that it cost the business more than ₦14 billion to fix fibre cuts between 2022 and 2023. Why IHS Towers is facing a shareholder revolt
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- August 20 2024
TechCabal Daily – A renewed hope in investing
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning We’re excited to announce our partnership with Wimbart on the second edition of their pioneering pan-African research publication, “Startup Performance Reporting in Africa”. This report will shed light on the intricacies of investor relations within the African tech ecosystem. If you’re a founder, take a couple of minutes to share some key insights with us by filling out this survey. Inside Renew Capital’s move to invest in West African startups Ghana moves to regulate crypto MTN liquidates Visafone Kenya plans for an eco-levy The World Wide Web3 Events Investment Inside Renew Capital’s move to invest in West African startups Image source: TechCabal At the beginning of August, Ethiopia floated the birr, ending years of strict currency controls. As with many countries with currency controls, repatriating money could be impossible. Here’s what that looks like if you’re a foreign investor: you could invest $1 million in that country, make 10x but struggle to get your profits out of the country. We’ve seen this play out in Nigeria in 2021, with companies using unorthodox ways to get money out of the country. If you make money in a country but can’t get it out, it might as well be monopoly money, and if you’re an investor, when you get your money out, you want to move to a country or region where FX policy is market-determined and predictable. It’s unclear if that was Renew Capital’s experience in Ethiopia, but CEO Matt Davis concedes the firm learned lessons. After 10 years of investment, it figured it would look to other parts of Africa. The VC firm now invests in asset-light and tech-enabled businesses in West Africa and North Africa. It has started its investment in West Africa by investing in Affinity, a Ghanaian digital bank. Renew Capital invests through two funds: a $6 million angel syndicate and a $15 million follow-on fund. It invests between $50,000–$500,000 in startups in its accelerator, and gives a follow-up of $1.5 million to startups that meet its metrics set during the accelerator. The VC firm employs an unusual method of vetting founders including giving founders exercises to see how they perform. The VC firm believes in backing founders who are trustworthy, focused, and very disciplined. While Davis has learned a lot of important lessons in investing, he believes the biggest lesson yet is continuous learning. To learn more (pun intended) about Renew Capital and its investment thesis, read the full interview here. Read Moniepoint’s 2024 Informal Economy Report Did you know that 57.7% of the business owners in Nigeria’s informal economy are under 34 years old? Click here to find out more about the demographics of Nigeria’s informal economy. Regulation Bank of Ghana to issue new VASP licences Image source: CCN Ghana wants to regulate its crypto industry. In a recent draft framework, the Bank of Ghana (BoG) outlined the processes that VASPs and other crypto players operating in the country must take to avoid regulatory non-compliance. BoG said that the high popularity of crypto has made it necessary to regulate digital assets—deviating from its earlier stance to ban all crypto transactions. In a similar fashion to other African countries that have made plans to regulate crypto, Ghana will soon issue VASP licences to crypto operators in the country. The released framework emphasises that Virtual Assets Service Providers (VASPs) must provide financial trading accounts, carry out customer due diligence to ensure risk compliance with anti-money laundering (AML) policies, and operate physically in the country. BoG also stated that VASPs must apply for their licences within a specified timeline once its regulatory framework is finalised. Companies that do not apply within this period will be chalked up as operating illegally in the country. It’s not surprising that cryptocurrency adoption has grown rapidly in many countries—especially in Africa—despite attempts to suppress it. When governments fail to regulate a technology that attracts many users, it often flourishes underground. The mistake made by many African countries, and others worldwide, is their failure to understand cryptocurrency. Instead of trying to comprehend and effectively regulate it, they opt for the simpler but less effective approach of attempting to suppress it entirely. The changes now suggest they’re adopting another approach. Collect payments anytime anywhere with Fincra Are you dealing with the complexities of collecting payments from your customers? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. What’s more? You get to save money on fees when you use Fincra. Get started now. Companies MTN liquidates Visafone Image source: Premium Times Nigeria For those who nostalgically recall the names Visafone, Multilinks, and Starcomms, you’re likely part of a select group who lived through Nigeria’s early mobile era. These pioneering networks, the last of the country’s CDMA breed, relied on technology that now seems quaint, dwarfed by the speed and efficiency of GSM and LTE networks. Before the NCC phased out CDMA in 2019, Visafone, the country’s last CDMA operator, had an 800MHz LTE spectrum licence needed for 4G mobile network services. Although the company was struggling and neck-deep in debts, MTN acquired it for ₦43 billion ($26.9 million) to use its 800MHz spectrum to launch fourth-generation Long Term Evolution (4GLTE) services which it would use to compete with Glo. Jim Ovia, CEO of Visafone at the time said that acquisition was necessary as the company didn’t have the ingredients needed to compete with other telecom companies. That partnership may have well served its cause. MTN’s financials for the first half of 2024 showed that the telecom has liquidated Visafone after recording losses of ₦30.3 billion ($18 million) on the 2016 acquisition. The move marks the final chapter in Visafone’s journey. Paystack Virtual Terminal is now live in more countries Paystack Virtual Terminalhelps businesses accept secure, in-person payments with real-time WhatsApp confirmations and ZERO hardware costs. Enjoy multiple in-person payment channels, easy end-of-day reconciliation, and more. Learn more on the Paystack blog →
Read More- August 19 2024
Kenya Airways is profitable for the first time in a decade, posts $3.9 million net profits in H1
Kenya Airways has reported its first profit since 2013, driven by higher income and lower operating costs. The national carrier posted a $3.9 million (KES513 million) net profit in H1 2024, a 102% increase from the previous year. This is a major reversal of fortune for the company, which posted a $168.3 million (KES21.7 billion) loss in H1 2023. The company is eyeing its first full-year profit in over a decade next year. “It goes to show what we can do as an airline. There is still room for improvement, and the board is happy with these results,” Michael Joseph, Kenya Airways chairman, said at an earnings call on Monday. KQ’s total income rose 22% to $709.8 million (KES91.49 billion). Its operating costs dropped by 22% to $699.8 million (KES90.20 billion). Allan Kilavuka, the airline’s group managing director, said that KQ is looking to break even by the end of 2024. “We are not there yet, but this is a significant milestone that indicates our intention to continue transforming this organisation to a fully stable and sustainable airline so this is something we want to celebrate,” Kilavuka said. The carrier, which the government holds a 48% stake in, was insolvent in 2018 after years of expansion left it with huge dollar-denominated debts.
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- August 19 2024
OAU DE screening exercise for 2024 admission begins
Obafemi Awolowo University (OAU) has announced the start date for the Direct Entry (DE) screening exercise for the 2024/2025 academic session. Here’s everything you need to know about the OAU DE admission 2024 process: Registration starts on 19th August 2024 Direct Entry candidates can begin their registration for the screening exercise on Monday, 19th August 2024. This is a vital step for all DE candidates seeking admission into OAU, so early registration is strongly advised. What to expect during the screening No additional exams: Direct Entry candidates will not have to sit for any further exams. The screening will focus solely on the verification of credentials. Document submission: Ensure all required documents are correctly uploaded during registration. This will be the primary basis for your eligibility assessment in the OAU DE admission 2024 process. Important documents for OAU DE admission 2024 Candidates applying for OAU DE admission 2024 should ensure they have the following documents ready for upload: Direct Entry form: The official DE form filled out and submitted during the JAMB registration. O’Level Result: Original and photocopies of your O’Level result(s) (WAEC/NECO/GCE), showing at least five credits in relevant subjects. A-Level result: For candidates who completed A-Level studies, include your A-Level result or its equivalent (e.g., IJMB, JUPEB). Diploma certificate: For candidates who obtained a diploma, include the certificate and transcripts from the awarding institution. Birth certificate: A valid birth certificate or sworn affidavit of age declaration. Recent passport photographs: A clear, recent passport-sized photograph meeting the university’s specifications. Key steps for candidates Register early: Avoid last-minute issues by starting your registration as soon as the portal opens. Double-check documents: Ensure all your academic credentials are correctly uploaded to avoid complications during verification. Final thoughts on OAU DE screening exercise for admission cycle The OAU DE admission screening exercise is a significant part of the admission process. Staying organised and following the instructions carefully will help secure a place in the Obafemi Awolowo University.
Read More- August 19 2024
MTN liquidates Visafone, recognises $18 million loss years after winning spectrum battle
MTN has liquidated Visafone, recognising a loss of ₦30.3 billion ($18 million) on the 2016 acquisition of Nigeria’s last-standing CDMA network. “Following the absorption by MTN Nigeria, Visafone is now fully liquidated,” a note in its H1 2024 financial statement said. “The liquidation process was completed during the period, and all remaining assets and liabilities of Visafone have been transferred.” When MTN Nigeria acquired Jim Ovia’s Visafone, its goal was to improve the quality of broadband internet. It had its eye on Visafone’s 800MHz spectrum licences, which would have helped MTN deliver 4G LTE Internet services to its subscribers. MTN Nigeria did not immediately respond to a request for comments. That spectrum licence made Visafone—with 2.2 million registered subscribers—strategically important. It would also prove to be a bone of contention for three years. With Nigeria’s Communications Commission (NCC) reluctant to approve the transfer of the spectrum licence, MTN initially considered pulling out of the acquisition. Competitors Airtel and 9mobile argued that if MTN Nigeria acquired the spectrum, its stake would increase from 38% to 50% of the entire spectrum available. For MTN, the acquisition was important to allow it to compete with Globacom which launched 4G LTE services in October 2016. It was not the first time MTN was acquiring a spectrum licence holder. In 2006, it bought VGC Communications Limited (VGCCL) for $70 million (N9.3 billion). VGCCL was licensed by the Nigerian Communications Commission (NCC) to provide cabling and radio telephone services nationwide. While Visafone did not disclose the terms of the acquisition in 2016, the filing shows MTN invested ₦43 billion.
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